Prepare for the unexpected
Hedge fund managers are regarded as the most sophisticated in the financial services arena. But are they prepared to cope with unexpected shocks to the system?
Liquidity risk is one of the most important yet often ignored risks for a hedge fund, and hedge fund managers and investors need to learn more about the role liquidity plays in their returns.
It is often said hedge funds provide liquidity to the markets, but what happens when their own liquidity is reduced?
Liquidity affects not only the returns of a hedge fund, it also affects the capacity of a hedge fund strategy and can alter the risk-reward balance of individual trades and whole portfolios.
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